Stocks fell for a second day as traders tracked developments in Washington, where US President Joe Biden and House Speaker Kevin McCarthy said they held productive talks on the debt ceiling but had still not reached a deal to avert a calamitous default.
The PSE index, the 30-company bellwether, dropped 17 points, or 0.26 percent, to close at 6,603.56, as five of the six subsectors retreated.
The broader all-shares index went down by 6 points, or 0.19 percent, on a value turnover of P6 billion. Losers outnumbered gainers, 105 to 80, while 44 issues were unchanged.
Only three of the 10 most active stocks ended in the green, led by GT Capital Holdings Inc. which climbed 2.37 percent to P519.00. SM Prime Holdings Inc. rose 1.47 percent to P34.50, while Bank of the Philippine Islands inched up 0.10 percent to P103.00.
Most Asian markets also struggled Tuesday. With just weeks to go before the United States runs out of cash, the standoff has become the key topic on trading floors on fears that a US failure to pay its bills will send shockwaves through markets and the global economy.
Months of negotiations have failed to break the deadlock and lift the borrowing limit from the current $31.8 trillion, but things appear to be moving in the right direction after a series of Biden-McCarthy meetings.
After their latest get-together on Monday, the Republican Speaker said: “I felt we had a productive discussion. We don’t have an agreement yet, but I did feel the discussion was productive in areas [where] we have differences of opinion.”
He added that negotiators would “work through the night” to move the sides closer and that he and Biden would “talk every day to try to find a way to get this done”.
For his part, Biden also described the talks as “productive” but that there were still “areas of disagreement”.
While the two sides agree a default must be averted, they continue to disagree on certain issues. Democrats want to close tax loopholes to raise revenue and Republicans are calling for spending cuts.
Still, there is a broad view that a deal will eventually be done.
“Right now, there’s probably going to be continued posturing by both sides, but at the end of the day, it’ll probably be resolved last minute,” Burns McKinney, at NFJ Investment Group, told Bloomberg Television.
“What we expect in the near term is heightened volatility.”
After a mixed start to the week on Wall Street, Asia opened higher but was unable to maintain momentum.
Tokyo, Hong Kong, Shanghai, Wellington and Bangkok fell, though Singapore, Seoul, Taipei, Mumbai and Jakarta edged up. With AFP